Financial struggles can happen at any age, whether you’re in your 20s living paycheck to paycheck at an entry level job or a senior citizen surviving on a retirement fund. No matter your age, chapter 7 bankruptcy is the only form of permanent, reliable and court enforceable debt relief available.
Filing for bankruptcy can turn around an individual’s life at any age and help them maintain long-term financial stability debt free. If you’re considering filing for bankruptcy as a retiree, there are several things to take into account that might affect you differently than a similarly situated younger person. At Behm Law Group, Ltd. we provide expert legal guidance and protection throughout the process of filing for Chapter 7 bankruptcy in Jackson, MN and the surrounding area.
Chapter 7 bankruptcy is called “liquidation bankruptcy”. Quite simply, a filer’s non-exempt assets are liquidated or sold by a chapter 7 trustee and the proceeds are used to make some sort of payment to one’s creditors. The vast majority of one’s debts are completely discharged in 90 to 120 days. However, in the vast majority of cases, the bankruptcy exemptions provided by the bankruptcy code are quite generous and are more than sufficient to protect all of a person’s property and the only things a person loses are one’s debts.
If you plan to file for Chapter 7 bankruptcy as a retiree, there are some things to consider before you file a bankruptcy petition that are specific to your age and situation:
• Retirement funds: In Chapter 7 bankruptcy cases, retirement funds are exempt from the liquidation process. The bankruptcy exemptions protect 401(k) and 403(b) accounts, as well as profit sharing accounts and certain other types of IRAs and retirement funds from liquidation. However, if you’re living off income from those accounts as a retiree, keep in mind that you might not qualify for Chapter 7 bankruptcy if the monthly retirement income causes your income to exceed the state median income for a household of your size. Fortunately, other income from Social Security benefits, veterans’ disability assistance and COVID-19 relief/stimulus will not affect whether you qualify for chapter 7 bankruptcy relief.
• Home equity: Most retirees have paid off their mortgages and fully own their homes. This means they have built up a significant amount of home equity or value. If you do have a lot of equity in your home and plan to use that value to support you financially in the coming years, under the Minnesota state bankruptcy exemptions, you will be able to protect that value or equity up to $420,000 if your homestead is not used for agricultural purposes or up to $1,050,000 if your homestead is used for agricultural purposes.
• Medical bills: The majority of senior citizens and even younger retirees face health issues as the years pass. Because of this, it’s common for medical bill debt to become a significant factor in the decision to file for Chapter 7 bankruptcy. If you have severe medical debt, filing for Chapter 7 bankruptcy is the most effective way to find relief from medical bills and other unsecured debts. In fact, medical debt is sometimes the only reason retirees file Chapter 7 bankruptcy.
To learn more about filing for Chapter 7 bankruptcy in Jackson, MN as a retiree, contact Behm Law Group, Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.
